Chapter 25 notes

Question 1

statements on standards for accounting reviews(SSARS)

Answer 1

issued by the accounting and review services committee of the AICPA

Question 2

a review services SSARS review

Answer 2

engagement allows the accountant to express limited assurance that the financial statements are in accordance with the applicable accounting standards

Question 3

procedures suggested for reviews

Answer 3

evidence for a review is primarily of inquiries of management and analytical procedures, must obtain evidence

Question 4

evidence for reviews

Answer 4

obtain knowledge of the accounting principles and practices of the clients industry
obtain knowledge of the client
make inquiries of management
perform analytical procedures
read the financial statements
obtain letter of representation
prepare documentation

Question 5

form of report

Answer 5

1st paragraph:
intro
2nd paragraph:
specifies management is responsible for fs
3rd paragraph:
notes responsibility of accountant
4th paragraph:
expresses limited assurance

Question 6

failure to follow applicable accounting

Answer 6

report should disclose the effects of the departure as determined by management

Question 7

compilation service

Answer 7

where accounts obtain financial information, but don’t provide any assurance on it

Question 8

requirements for compilation

Answer 8

establish an understanding of the client in a written engagement
possess knowledge about the accounting principles and practices of the clients industry
know the client, including a general understanding of their industry
make inquiries to determine whether the info is satisfactory
read the complied financial statements and be alert for obvious omissions or errors
prepare documentation in sufficient detail to provide a clear understanding of the work performed

Question 9

types of compilation reports

Answer 9

1. compilation with full disclosure
2. compilation that omits substantially all disclosures
3. compilation without independence

Question 10

parts of a compilation

Answer 10

report title
date of the report is the date of completion
each page of fs should state see compilation report
if client fails to follow accounting standards, auditor must include the same modifications in the compilation report that are used in a review report

Question 11

public company interim review

Answer 11

requirements

1. obtain knowledge of the accounting principles of the clients industry
2. obtain knowledge of the client
3. make inquiries of management
4. perform analytical procedures
5. obtain a letter of representation

Question 12

attestation engagements

Answer 12

the CPA reports on the reliability of info or an assertion made by another party

Question 13

statements on standards for attestation engagements

Answer 13

issued by AICPA for attestations

Question 14

three levels of attestation engagements

Answer 14

1. examinations
2. reviews
3. agreed upon procedures

Question 15

examination

Answer 15

results in a positive conclusion expressed in an opinion

Question 16

review

Answer 16

provides a moderate level of assurance that is expresses in a negative assurance conclusion

Question 17

agreed upon procedures

Answer 17

all procedures the CPA will perform are agreed upon by the CPA firm and the recipient of the report

Question 18

webtrust

Answer 18

a client engages a CPA to provide reasonable assurance that a company's website complies with certain trust services
principles
security
availability
processing integrity
privacy
confidentiality

Question 19

systrust

Answer 19

evaluation of a computer system

Question 20

prospective financial statements

Answer 20

predicted or expected financial statements in some future period or date
two types
forecasts
projections
for general or limited audiences

Question 21

forecasts

Answer 21

present an entity’s expected financial position to the best of the responsible party’s knowledge

Question 22

projections

Answer 22

present an entity’s expected financial position to the best of the responsible party’s knowledge based on one or more hypothetical assumptions

Question 23

examination of prospective financial statements

Answer 23

1. evaluates the preparation process
2. evaluates support
3. evaluates the presentation of the fs for conformity with AICPA
4. issues an examination report

Question 24

other comprehensive basis of accounting

Answer 24

cash or modified cash basis
basis used to comply with the requirements of a regulatory agency
income tax basis
a definite set of criteria having substantial support